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Flash MicroPayment Exclusivity: Bad Idea, or Terrible Idea?

If you were there during the early days of the telephone, wouldn’t you have loved to have provided input? Maybe suggest to Alexander Graham Bell that telephones should issue low-grade electric shocks to teenage girls who talk on the device for more than half an hour? Or suggest a magnetic socket to Edison so that we could avoid all those inane “screw in a lightbulb” jokes for the rest of our lives?

Wouldn’t cars be better if they were on giant slots with computer guidance systems? You could punch in your destination and fall asleep at the wheel, with no whammies.

If you’re a Flash game developer, you’re in at the ground floor of a new service: payment systems for Flash games. These systems make it easier for game developers to charge money both for their games, and for things within their games. Here’s how it works:

Player pays real money to buy fake money through one of these systems.

Player spends fake money on virtual stuff. As a game dev, you can technically charge for whatever you like: level packs, hats, extended versions/director’s cuts, etc etc. The sky’s the limit.

It’s So Workable, It Just Might Work

i’ve been following the microtransaction model for a number of years. It’s been crazy popular in places like Korea for a good long time, and it was amusing to see the initial resistance and resentment in North America to the idea. Panels at the Game Developers Conference were filled with folks nibbling their fingernails and asking “Will it really work over here?” and “Won’t players be angry with us?”, with at least a few devs boldly insisting that micropayments are strictly a Southeast Asian cultural anomaly, and the system won’t work here. Meanwhile, in the other room at the Worlds in Motion (virtual worlds) summit, early North American pioneers of those systems were running panels titled “Can You Believe We’re Making All This Money?” and “Who Wants a House? Cuz I’ve Got a Bunch of Em”.

No – for real, guys. i’m, like, SO rich.

Of course, virtual currency systems do work here, as evidenced by Microsoft’s successes with its GamerPoints (AKA “BillyBucks”), enabling the creators of Rock Band and others to pocket obscene amounts of cash in dribs and drabs for virtual whatsits. Microsoft’s new fall Xbox 360 seems to exist only to take more money from people in the form of digital doodads for their avatars. Proprietary systems have been rolled out in numerous other games and portals, including Three Rings (OOO) Puzzle Pirates with its dual-currency system, and the WildTangent game portal, where players can spend virtual coins to “rent” games. But no one has thought to capitalize on the literal kerfillions of players in the Flash casual games space. Until now.

There are three companies i’m aware of who are rolling out virtual payment systems for Flash games: MochiMedia, GamerSafe and HeyZap. Please let me know if there are others. They all work roughly the same way: pay real money for fake money, and spend fake money for fake things in fake games for real thrills. One of the key take-aways for me from GDC 07, by the folks running the “Seriously. My Pants Are Woven From Hundred Dollar Bills” panel, was this: do whatever it takes to enable your players to give you money.

What they meant was that you should provide as many payment methods as possible if you want to take as much money as possible from your players. This came up in the context of the myriad wild and wooly ways that Europeans pay for things online. (The French, for example, pay by cheque. True story.) The speakers advocated pay-by-phone, PayPal, credit cards, debit cards, SMS, and a number of crazy payment methods i’d never even heard of. (Pay with your own hair? What the heck is that about?)

Untold Entertainment Enters the Fray

So here we are, poised to release a few games in the no-longer-free-to-play ecosystem. These are early days, and i have no idea which microtransaction system will take the biggest piece of the pie: MochiCoins, GamerSafe or HeyZap. And frankly, i don’t care. Why should i have to choose between them? Here’s what i want to do:

ME: Hey Player! Wouldn’t this game be more fun if your character was wearing SexyPants??

Sounds good, right? i’m not shutting anyone out. i’m not preventing the GamerGold folks from buying SexyPants. i don’t particularly care which system the player supports – i just want to take his money.

However

The scenario i described above can’t happen at present, because MochiMedia has written into their terms of service that devs shall not hook multiple transaction systems into their games. GamerSafe and HeyZap have not made this stipulation. So i can have a game that either allows MochiCoin payments exclusively, or i can have a game that allows for GamerSafe and HeyZap payments. And that, in my professional opinion, stinks.

This type of exlusivity is NOT analgous to going into a restaurant and ordering a Coke, and the waitress says “Is Pepsi okay?” because the restaurant has an exclusive arrangement with PepsiCo. No – this is much more like eating your meal (Coke or Pepsi nothwithstanding), and trying to pay with your VISA card, but the restaurant only takes MasterCard and American Express. If i walk into a store and they don’t make it convenient for me to pay with a commonly accepted system, i walk out of that store and i don’t come back … but not before i punch someone right in the face, because that’s how angry it makes me.

(spoiler alert)

Three Facts About Payment System Exclusivity

MochiMedia’s exclusivity clause is not good for developers. We want to lower the barrier to entry for our players, especially since getting people to buy goods in the formerly-free-to-play space is already an uphill battle.

MochiMedia’s exclusivity clause is not good for players. It’s forcing players to wait until a clear winner emerges in the Flash virtual goods space. Why would i sink my money into GamerGold only to find that every single game supports HeyZap or MochiCoins? i’d better play it safe and let early adopters figure it out for me. When a leader emerges, i’ll start spending my money.

No, Mochi’s exclusivity clause is only good for Mochi. It’s a clear attempt to be the only game in town, and to monopolize this service in its infancy. And we all know what happens with monopolies, don’t we? You end up rolling a “3” and landing on Park Place with a hotel, and then you get reamed up the pucker.

Thankfully, it’s still early enough in the make your voice heard about how this stuff will work. If you think Mochi should play nicely with others, why not toss them an email here?

Or, if you think they’re making the right decision, give them a call and let them know:

(415) 680-3740

Or, you can just voice your opinions in a comment on this blog and bathe me in sweet, delicious Internet traffic.

For my part, i believe they’re hurting players and devs right out of the gate in an early, unnecessary bid for domination. Given the choice, i’d rather support two systems than one – HeyZap and GamerSafe. Ideally, i want to support all three, along with any other system that enters the space. So i’m making a public appeal to you, Team Mochi, to rethink your policy. i’ll even use your first and last names here so that your Google vanity searches will bring you to this article.

On George Garrick! On Jameson Hsu! on Bob Ippolito! On Vixen!
On Comet! On Cupid! On Justin Wong! On Eric Boyd!
To the top of the porch! To the top of the stair!
Renounce this proviso, and please grow a pair!

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That’s the second big complaint I’ve heard levelled at Mochi’s way of handling virtual currency (the first being the whole “free coins” debate).

When GamerSafe was first announced, Chris from FGL posted this on the forums: “…we also kept in mind that there are a ton of MT systems out there and coming out. We truly want to give everyone more monetization options, not limit anything. That’s why we made sure to make our system flexible enough so that it can easily “exchange” our currency (GamerGold) with other currencies. All we would need to do is work with those companies to make it happen.”

A system like that could be great for developers and players… but it sounds unlikely given Mochi’s exclusivity terms.

Thanks for that link, MJW. It’s a HUGE thread, and i just burned a few hours reading through it all. Please allow me to summarize the salient points:

When the player buys MochiCoins in a certain bundle, he gets a few bonus free coins. Mochi gets 100% of the real money paid.

The player spends MochiCoins on items and features in your game. You get 60% of the value of the MochiCoins spent.

Since some of those coins may be “free” coins, you earn 60% of zero dollars for those coins.

The issue is that MochiMedia is leveraging developers’ goodsto run their own free coins promotion. They’re effectively giving away developers’ goods for free, and the devs have no say in the matter.

To hear MochiMedia tell it, the free coins system encourages people to buy more coins. Good for Mochi – they earn their 40% no matter what. But devs lose out, and the crux of the issue is the advertised 60/40 split. Devs do not actually get a 60% split, due to the free coins floating around in the system that could potentially be spent on their game.

Whether or not this is a vital issue for you, it only underscores my point that making a MochiMonopoly out of this situation is a bad idea. We NEED to support multiple systems. We NEED to keep these transaction providers competetive with each other. As devs, we are their customers, and competition benefits customers.

The more i learn about the flaws in Mochi’s system, the more i lean towards GamerSafe. But still, i don’t think solely supporting GamerSafe is a good idea. Mix it up! It’s more work, but worth it in the long run.

To answer my own question, here’s a list of competing services and respective revenue splits that i pulled from one dev’s comments in the MochiMedia thread:

Carrotpay’s Carrots: 97.5% developer share (but it’s not much in the way of microtx; I don’t even think that the “carrots” are the same for each currency you buy with)

Kongregate’s Kreds: I think it’s 75% or 85%, but the thread throws out several numbers

Andrograde: 75%

Nonoba: 70%

FGL’s GamerSafe: I’ve heard anything from 60% to 75% (Chris from FGL actually said on the GamerSafe forum that Mochi’s “free coins” business practice is “pretty dumb” and that GamerSafe doesn’t do that)

The same developer, Tathar, who turns out to be the Smartest Guy in the Room throughout that thread, goes on to call HeyZap “the sleaziest” mictrotransaction system out there, thanks to this clause that enables them to take 100% of proceeds at their whim:

Heyzap reserves the right to change the variable percentage it receives at any time.

I’d like to point out that Mochi (and every one else) also have this in their TOS. We are NOT going to revoke your revenue share or raise the cut on our end.

Generally these TOS get written by lawyers and have overly protective terms (sorry about that). Amazon, Paypal, Google, the Apple App Store and most established companies all have similar structures in their TOS. We’re a reputable venture capital funded company (same guys who funded Zynga and Twitter) and will adhere to paying out the state revenue share. I’ve put the Mochi Coins TOS quotes below for comparison:

“MOCHI MEDIA RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO MODIFY THIS AGREEMENT AT ANY TIME BY POSTING A NOTICE ON THE WEBSITE, OR BY SENDING YOU A NOTICE VIA EMAIL.

“For a full list of current Mochi Coins payments you may earn, see the Mochi Coins FAQ. Mochi Media reserves the right to change the Mochi Coins Payments at any time.”

That was a long & interesting read about the free coins being financed by the devs. This quote sums it up well:
—-
(A) (CURRENTLY) The free coins are financed by those developers whose game the free coins are spent on. Not every developer is financing these free coins. Which developers finance the free coins is a matter of luck. Effectively, every developer gets a different cut. On AVERAGE, nobody gets 0% or 60%.
(B) If the free coins are taken as a transaction/marketing expense, and developers still get paid for purchases using free coins, then they would effectively be financed by Mochi’s cut. Effectively, developers get exactly 60%, and Mochi gets less than 40% (but Mochi can control this impact by deciding how many free coins to give away). If I am not mistaken, Apple apps store takes this approach. So does Sony PSN at times when they give away free credits.
(C) If the coins have a variable rate, then Mochi and all developers participate in the financing of the free coins equally. Effectively, developers get 60% of whatever value of the (variable rate) coins. If I am not mistaken, XBLA takes this approach (not 100% sure but I think the rate is computed quarterly, so do payments made).
—
I agree with that poster that B) and C) would be a lot more transparent & fair for devs.

This is Mr. Shen from the land of Mochimedia. From a non-Mochi standpoint, I appreciate this article and the information that it provides for all the developers out there. As an indie developer myself, I think it’s extremely important that the community grows and keeps everyone in the loop of opinions, information and objective commentary on the tools available. In the end, it’s up to you as a developer to choose what system works best for you and your project.

First off, I wanted to point out that MochiCoins is not simply a payment option. If you wanted the highest percentage possible, it would simply be to integrate PayPal (or CarrotPay, it seems) into your game and be done with it. MochiCoins actually offers a lot of tools as it is actually just one facet across the entire suite of Mochi tools that are free to all developers. It offers a payment system, yes, in addition to security, a terribly easy system to implement, universal currency, a wide distribution network with premiere publisher sites such as AOL and SPIL Games and a brand that has been trusted and in the space for many years. Every game that comes into our system also gets personal attention on how to integrate the API as best as possible and best practices we’ve seen across games currently using the system. I don’t want to keep going as it’ll turn into a commercial in no time at all.

I would like to thank Jude from HeyZap for taking the time to personally go through Mochi’s TOS and quote those statements. We want to be as open as possible and the information is obviously there in the open. We’ve been in the space for quite some time and have been looking out to help developers grow. We have nothing to hide. Only if developers make money can Mochi sustain its business, so your interest is a top priority of ours.

We are constantly building upon the platform, adding new features such as payment options and increased customer service (we handle all of the charge backs and whatnot for you), so rest assured that the suite of tools available to all developers will get more robust.

We have a lot planned and we can’t wait to see your games! Big thanks to Ryan for this post. The more informed we are as developers, the better choices we can make as an industry.

Thanks, Mr. Shen. i’m glad that you chose to highlight the actual develop-centric benefits of your system, like your strong brand and wide distribution. i’ve seen other Team Mochi members extol the virtues of your high scores system, but let’s be honest – that’s a really great feature that helps Mochi build its community. We’re trying to build our own community here, so it’s not much of a draw at all.

Heyzap reserves the right to pass on chargebacks associated with a game associated with a Developer.

And here’s a similar line from MochiMedia’s TOS:

Mochi Media shall be authorized at any time to chargeback any fee paid to you in the event an end user assesses a chargeback against Mochi Media for Mochi Coins used in a transaction within your game or defaults on any amounts owed to Mochi Media for such Mochi Coins.

So while you SAY you handle all chargebacks (perhaps implying that HeyZap doesn’t), both companies have a little legal cover-yo-ass statement enabling them to pass chargebacks and defaulted credit card payments on to the developer.

For the uninitiated: a “chargeback” is where someone buys something, usually with a credit card, and then tells the credit card company to reverse the charge. There are a few different reasons why this happens:

The customer receives an item he didn’t pay for (this can be due to either merchant or customer error)
The customer intentionally selected and paid for an item, but decided he didn’t want it any longer (these are the ones you usually want to fight)

I apologize for not making myself more clear! My usage of chargebacks was a singular example of the inbound customer service in general that Mochi is willing to handle: chargebacks, wallets being improperly funded/withdrawn, any questions about the system, account status, and so on.

I would never imply anything of HeyZap or any other company for that matter! If I were to make statements of such a kind, I would be completely upfront about it. To assume that I was implying the things I listed as services HeyZap did not offer would also mean you did not offer a “payment system”. That would not make sense as that is the topic of this conversation and post. Such underhanded statements and tactics are for those who care not for the community they serve.

Even though I work at Mochi, I’m an indie developer first. Everyone should do their research and see what works best for them. If you have any questions about MochiCoins, the Mochi platform in general or just want to talk game development, please do contact me at “alexander@mochimedia.com” and I’ll be more than happy to communicate with you! I really could talk games all day long.

Thanks again, Mr. Shen. i’ll echo your statement: if you don’t know which transaction service to support, do your research. OR, let Untold Entertainment do your research for you! The reason why i wrote this post to begin with was because i wanted to use at least three systems in an upcoming game, and to report back with reviews on each of the systems – a follow-up series to Pimp My Game.

i’m glad to hear, according to Bob, that you make exceptions. i’m eager to implement your system and to report the results back to the developers who read this blog.

Hi, great article. I just wanted to chime in and clarify GamerSafe’s revenue share model. Developers receive between 60% and 70% of the gross income from their item sales, depending on what website the game is hosted on when a sale happens. (We have relationships with some game portals where they receive a share of the revenue in exchange for promoting our games.)

It’s very important to understand the distinction between gross and “net” income; by using gross income, what we’re saying is that if you buy something that costs the GamerGold equivalent of $1.00, you will get $.60 to $.70 from the sale. Extremely intuitive.

Not all services use this straightforward payment model, and it can be difficult to determine the exact amount of money you will earn. We want to be exceedingly straightforward, even though that makes our share seem smaller than competitors who promise a percentage of the NET profits.

As we evolve GamerSafe and add additional payment models (such as payment by cell phone, which has a very high overhead), I am sure our payment model will evolve some, just as our competitors’ will. But we will do our best to always be as transparent as humanly possible, as we think transparency breeds trust.

Did anyone made any research on what is the best service for micro-transactions today?

I noticed that MochiCoins and GamerSafe systems are still in beta and not available for everyone. Personally I send developer’s signup requests to Mochi, GamersSafe and HeyZap and decided to use the first one where I get response.

In case of MochiCoins I’m still waiting for answer, and frankly I thought that they’ll be the first which will give me permission to use it. No matter that before I asked them for permission to use their service and talked with someone inside their team to make things happens quicker. No matter that I already installed part of the premium items in their store and send them a link where to check it, no response. After that I found also several threads on their forums that some of developers located in exactly the same situation. May be MochiCoins is a pretty popular service but they are very slow in approve stores.

GamersSafe has exactly the same situation. They are in beta, they has some forum thread on FGL where you need to sign up and write your developers’ request and wait. Today I saw about 48 posts in this thread and have no idea how much of them got permission. Yesterday I had some conversation with one of their team too using PM service on FGL and I hope I’ll get approve from their side… someday ;)

Now, imagine my surprise when I signed up to HeyZap service and found that I don’t need approve nothing, it just works and more then that, they give $50 free for using their service! Awesome!

To conclude all of above, today I suggest all developers use HeyZap if they need micro-transactions payment immediately. Consider also that they give first priority to famous developers from Flash community and if you’re just made your first game where you want to use this service, it can take a lot of time to get it approved.

Regarding technical realization IMHO MochiCoins has the very best API for micro-transactions. Besides that they have a very good site for the end customers (players). Clear, simple design, a lot of options and easy to use navigation. Any player can see his achievements, statistics and so on.

On the second place I’ll put HeyZap, a little bit frustrating in navigation, all in one place (I mean end customers and developers must sign in from the same website). I prefer MochiCoins approach, where you sign in as a developer from MochiAds and as a player from MOchiGames. In their API I found several things missed comparing to MochiCoins service.

The good side both of them – they support Facebook!

On the third place I’ll put GamersSafe. It is very to use service and frankly I tried it first before other systems (of course as a player). Can’t say nothing about API, because I’m still waiting for my signup request as a developer . Their website has same one entrance place for signup for both developers and players, and I’m not sure about their support of Facebook friends.

In conclusion, IMHO this three will be major players in the micro-transaction market and hope they’ll unite someday to give use one API instead of three ;)

TheHelmsman – thanks for sharing! These guys are no doubt getting hammered with requests. Like you, i was happy to see that HeyZap is fully operational at this point with no special sign-up permission necessary. The other two players seem to be gunning for quality. i pitched a game concept to them – one of them reluctantly agreed to put it on their service, with some design concessions, and the other flat-out rejected the concept and said i must be joking. (TOTALLY sweet game idea, btw … you’ll love it!)

So they’re being very particular and controlling at this point. It makes me wonder if HeyZap doesn’t have the upper hand at the moment, and whether devs’ impatience will put HeyZap on top for the time being.

Re: “Whirled: 30% (60% if also the affiliate, whatever that means)” – whirled is actually creating a LOT of “free” coins that are indistinguisheable from “real”, with every submitted score. that’s why they run 3 different currencies, to manipulate effects of these coins and control inflation.

btw- weird! When i was at GDC two years ago, i asked Daniel James “why two currencies”? Now that i’m just understanding the reason, they step it up to three currencies. So i’ll ask all over again: Why three currencies? What advantages does that provide? And why not four currencies?

As I understand it, each currency can be used to buy different things, and separating in-game currencies out this way allows Whirled to control their economy (and most notably their cash-out rate) by altering the exchange rates between them.

I’ll explain: one currency is Bars. Bars can be bought with real money, but cannot be sold for real money. If you create an item, you can require other users to use Bars to buy it. When other users do so, you are paid in the currency of Bling.

Bling can be cashed out for real money, but cannot be bought with real money. In other words, the only way to obtain Bling is to sell items for Bars. Bling can also be used to buy Bars, but you can’t use Bars to buy Bling (this is starting to sound like one of those logic puzzles…). Whirled, naturally, controls the exchange rates from Cash -> Bars, Bars Bling, and Bling -> Cash.

The third currency is Coins. These are very versatile. You can buy Coins with Bars, and Coins can also be won by playing games, getting X number of friends, and other such in-Whirled achievements. However, Coins never really leave the Whirled. You can’t buy Bars, Bling or cold hard cash with Coins. You also can’t use Coins to buy items in the shop that are listed with a price set in Bars. But you *can* choose to sell items with a price tag listed in Coins, in which case they can be bought with either Coins or Bars.

Once you wrap your head around this, it’s perhaps more transparent than Mochi’s free MochiCoins, since the free Whirled Coins can never be cashed out; if you sold something for X coins you aren’t expecting to make $Y profit from them, just 30% of X coins.

On the other hand, since Whirled control the exchange rates, they could ramp up the dollar price of Bars and drop the dollar worth of Bling, effectively keeping more cash for themselves. I haven’t checked the TOS to see whether they say anything about not doing this.

Humphrey: All right, settle down. Settle down… Now, before I begin the lesson, will those of you who are playing in the match this afternoon move your clothes down onto the lower peg immediately after lunch, before you write your letter home, if you’re not getting your hair cut, unless you’ve got a younger brother who is going out this weekend as the guest of another boy, in which case, collect his note before lunch, put it in your letter after you’ve had your hair cut, and make sure he moves your clothes down onto the lower peg for you. Now…Wymer: Sir?Humphrey: Yes, Wymer?Wymer: My younger brother’s going out with Dibble this weekend, sir, but I’m not having my hair cut today, sir.Pupils: [chuckling]Wymer: So, do I move my clothes down, or…Humphrey: I do wish you’d listen, Wymer. It’s perfectly simple. If you’re not getting your hair cut, you don’t have to move your brother’s clothes down to the lower peg. You simply collect his note before lunch, after you’ve done your scripture prep, when you’ve written your letter home, before rest, move your own clothes onto the lower peg, greet the visitors, and report to Mr. Viney that you’ve had your chit signed.

Hahaha I was actually thinking about that exchange when I sat back and read what I wrote :)

It *does* make more sense when you’re actually using it. It’s like trying to explain how to play Civ. Let me try again, with a stripped-down version:

Coins can be used to buy stuff inside the Whirled, and are awarded for doing stuff inside the Whirled, like getting high scores in games.

Bars can also be used to buy stuff inside the Whirled, but are bought with real dollars. Anything you can buy with Coins, you can buy with Bars, too — but there are some things you can *only* buy with Bars.

Bling can be used to buy real dollars, and are awarded for selling stuff inside Whirled.

That’s basically it. Two things make it more confusing. First, the exchange rates between the three currencies (or four, if you count real dollars) can vary. Second, you only get Bling for selling an item if you specify that it can only be bought with Bars.

To be fair, Whirled don’t seem to be trying to compete with MochiCoins or the other virtual currencies. Rather, they’re trying to make a hugely customisable MMOG where (like in Puzzle Pirates) you can choose between earning coins in-game to unlock items, and just paying for them with real cash. The ability to exchange Bling for cash seems like a nice little incentive for the people who create the most, rather than a solid money-making scheme for devs.